Lost in Thailand: Revolutionizing China’s Movie Market

Lost in Thailand, a Chinese slapstick comedy, recently created a box office record of sorts. Released in China on December 12th, 2012, as a low-budget sequel to Lost on Journey, the film became an overnight success earning over $202.1 million in box office revenue. By January 1st, 2013, it earnt over RMB 1 billion, becoming the highest-grossing Chinese film ever.

This astounding success caught the attention and imagination of China’s film industry for more reasons than one. The film’s innovative business model, collaborative creative process, and use of social media and non-traditional advertising, are fresh concepts in the traditionally rigid Chinese film industry. Creative partners such as producers, directors, editors, scriptwriters and actors also became key financial stakeholders early on in the film’s production, a practice which is commonplace in Western markets but unheard of in China.

The film grew organically around an elaborate lattice-work put together by key stakeholders, instead of the traditional approach of piecing together independent work from actors, editors, screen writers and directors. The film, made with financial support and a distribution partnership with one of China’s largest entertainment distribution companies, Enlight Media, adopted a promotional strategy that was almost entirely based on leveraging social media, word of mouth and non-traditional behind-the-scenes viral video campaigns.

In a conversation with CKGSB’s Professor Li Yang, Lost in Thailand producer, Chen Zhixi, explains why the film was fail-safe and ultimately, one of the most successful Chinese films ever.

Lost in Thailand’s Wang Baoqiang, Xu Zheng, and Bo Huang

Q. In a relatively mature market like North America, you can predict how the landscape will develop with a high degree of accuracy. But in China the film industry is still not sophisticated enough, and sometimes you don’t know exactly what makes a film successful, just like Lost in Thailand. Under such uncertain circumstances, what could you be sure of? Considering that the success of Lost in Thailand was a major milestone, what do you think others can learn from it?

A.Lost in Thailand was cancelled twice due to financial issues. The investment for Lost on Journey (the prequel to Lost in Thailand) was just RMB 8 million, so many investors backed out when they saw the planned scale of Lost in Thailand. In addition, this was to be Xu Zheng’s directorial debut, so this was another uncertainty. But it was, in fact, these two setbacks that ultimately reinforced my cooperation with Xu Zheng.

A lot of people ask me why I invested in Lost in Thailand and whether it was simply because I had faith in (the film’s director) Xu Zheng. This isn’t the case. My decision to invest in Lost in Thailand was purely rational. Why did I feel it would be a success right from the start? When I first went to Enlight Media (for financing), I made one point clear: I put a mock-up of the poster featuring Xu Zheng, Wang Baoqiang and Huang Bo up and said (based on these actor’s reputations) it was worth RMB 200 million in box office revenue.

The investment for Lost on Journey was just RMB 8 million. It earned RMB 40 million at the box office and everyone considered that to be a success. But why did I believe Lost in Thailand would be an even greater success? The number of online searches for Lost on Journey exceeded 100 million. If even 20% of these fans, representing 20 million people, saw the film, how much would it make? I believed that this was something that could be calculated, and that this was a rational analysis.

We had set our sights on Xu Zheng, Baoqiang and Huang Bo as actors. We (also) had Shu Huan as our screenwriter. He is one of the best Chinese comedy screenwriters, and we already had him on board. Our production designer had previously won a Golden Horse Award [Editor’s Note: The Golden Horse Awards are administrated by the Taiwan Golden Horse Film Festival Executive Committee (Taiwan) and are considered to be an equivalent to the Academy Awards for Chinese-language films], and our sound engineer and cameraman had all been nominated for Golden Horse Awards. The team for Lost in Thailand was strong. Although it was a mid-to-low budget production, the team we hired was more like those used in major productions. The only difference was that it was Xu Zheng’s directorial début, and it was the first time any of us had made a film, so we all worked together on a low budget.

The decision to invest in Lost in Thailand and support everyone wasn’t made blindly. First of all, it was based on my belief in Xu Zheng’s ability. Secondly, it was due to my analysis of Lost on Journey. Thirdly, the franchise was created by Xu Zheng and Wang Baoqiang who were the core value of Lost on Journey. I believed all that we needed to do was to leverage this brand throughout the creative process, and with Huang Bo added to the mix, there would certainly be chemistry. I was sure Lost in Thailand wouldn’t fail.

Q. When it comes to new approaches to film making like yours, what do you think people in the Chinese film industry can learn in terms of the business model?

A. In future, I’ll probably be concentrating on the production side. I’d develop the project and then ask my team if they would like to come on board and invest in the project. I want to own a stake in projects and to share the projects with my team. This is not like in the past when we were all recruited. Under that system, we were paid but couldn’t take part in the financing of the project. I think in the future this new model will be used more often because it rewards those who work hard. If everyone has their own share, they’ll be more inclined to work harder in order to get a better return. This keeps the core team stable and ensures that there will be opportunities to work together again in the future. You have to consider building a strong team for future projects.

Hollywood has been successful at bringing together cultural icons and financing, and it doesn’t have anything else particularly special to offer. But China is different. We have the State Administration of Radio Film and Television, and a number of media-related restrictions. When making a film in China, you need to strike a balance between the culture, the government and financing.

Q. What you are discussing seems to encompass a wide range of innovative concepts. Do you find that the availability of talent is a limitation to the rate of innovation within the industry? Is it difficult to procure talent?

A. I don’t think there’s a lack of talent. It’s not that someone doesn’t have the ability, but communication and exposure to opportunity is an issue. In the past the Central Academy of Drama and Shanghai Theatre Academy were the best in the country. I graduated in 2000 from the Central Academy of Drama’s School of Acting after four years of college. When I was there, we only studied things related to our major and couldn’t learn about other aspects of the entertainment industry. The School of Production and Management taught the production process, and they didn’t talk about how to sell a product.

What does “sales” mean now? An understanding of the market is fundamental as is a knowledge of how to promote a product within the market, and finally one must know how to create a product which suits the market. If you don’t understand financing, how can you raise capital? There are a lot of talented people in the industry who only understand their area of expertise; they don’t understand anything about the industry overall. This is probably why there appears to be a lack of talent.

Q. The promotional campaign for Lost in Thailand was minimal. You relied on word of mouth and social media. Was this due to budget restrictions or something else?

A. We did a traditional promotional tour, with a premier, film trailers and promotional videos. We had the budget to continue this but didn’t. The impact of these traditional advertising methods didn’t compare to social media promotion. We made a lot of plans to promote the film, but actually the first set of viewers of the film became our advocates. When everyone came out of the cinema, Xu Zheng said, “If you enjoyed the film, I hope you’ll blog about it”. If each blog post led to two more viewers, the audience would immediately double. If they then blogged about it, momentum would grow quickly. We changed our strategy and decided to focus on word of mouth. Word of mouth is the best form of advertising, and you have to concentrate on what’s most effective.

Q. Did interest from mainstream media and microblogs help with sales at the box office?

A. It was a huge help. The CEO of Elle magazine (China) Wang Jieming, said to me right at the start, “You should create an e-journal for Lost in Thailand”. At the time, I didn’t think much of it because I was busy. But later during distribution, during filming, I introduced Wang Jieming to Enlight Media because they were in charge of distribution. Enlight Media worked with Elle (China) throughout the whole process, and made a number of interesting Lost in Thailand e-books and journals. This had a huge impact on promoting the film.

Q. Were there any shortcomings in terms of the marketing strategy?

A. We had some failures with Lost in Thailand.We went to Thailand, and used our poor English skills to sign a 2 million Thai baht deal with the Tourism Authority of Thailand. Aside from that, we had no money coming in in terms of product placement.

An example of a good product placement agreement is with Go Lala Go! and Japanese automotive manufacturer Mazda. Mazda didn’t pay much for product placement to start with, but in the end they paid RMB 40 million in advertising for the show when it aired. A film can’t come up with this kind of advertising money. So this is where we lost out. Lost in Thailand was a success. But if it wasn’t, we would have to say it was probably due to the failures in the early stages of business development. With the team that we had, we would have been able to get some large businesses on board and have product placements, our promotion and distribution costs would have been much lower.

About

Information, analysis, and interviews about the Chinese economy and doing business in China, from the people who know it best. Presented by the Cheung Kong Graduate School of Business, China's leading business school.